At all inflation. But who has the last word, Fed or White House?
In the US, prices are at their highest since 1982 and for the senior officials of the White House the fault lies with the Chinese closures and the various lockdowns around the world. But many economists think otherwise, there is a hand in the emotional effect of Biden's pandemic plans. Which explains the problem to the Fed
Inflation is becoming a very serious problem. Both for Joe Biden and for the Americans and despite a post-pandemic GDP recovery (+ 2.3% in the third quarter), they see incomes and purchasing power threatened by price increases.
And even for Jerome Powell, the Fed president forced to twist the schedule and rush into tapering, the central bank's disengagement from ultra-accommodative politics.
Over the weekend, a sort of rebound of responsibility for overheating prices took place, which risks getting out of hand, neutralizing the effects of the growth itself.
As reported by the New York Times, some senior White House officials have repeatedly blamed the international economy for high inflation, starting with the Chinese lockdowns that stopped entire industrial segments, to reach the blockade in the Suez Canal by almost one year ago.
In short, according to the men closest to Biden, American politics has little to do with the flare-up on prices.
The faults are to be found elsewhere.
Too bad that, according to the New York daily, many do not think so.
Starting with a large patrol of economists, many of them in a democratic orbit, according to whom inflation at record levels for 40 years now must be attributed to domestic politics.
And here in the dock are the mammoth pandemic plans set up by the administration and the consequent decision to flood the economy with money.
This is only partially true.
To date, Congress has not approved even the first of the packages, the Build Back Better which is worth 1.750 billion dollars, and this is because Dem Senator Joe Manchin has vetoed his plans by putting Biden on standby, but we must also remember that the president's promise to inject nearly $ 5 trillion into the market (such was the extent of the pandemic plans put together), however, had its psychological impact.
Families and businesses, on the emotional wave of these efforts, although not yet materialized, have ignited demand, pushing up prices.
There are no shots from the White House.
Biden himself, during the press conference on Wednesday in which he took stock of a year of presidency, clarified that if there is anyone who has to deal with the inflation problem it is the Fed. that high prices do not strengthen further.
Given the strength of the economy and the pace of recent price increases, it makes sense, as Fed Chairman Powell has indicated, to recalibrate the support now needed, ”Biden said.
It cannot be said that Powell does not have this issue at heart, since the health of the labor market also depends on the cut in rates and the cooling of prices.
Higher inflation also means reduced purchasing power and therefore the need to align wages.
But on the other hand, the same Fed number one blamed the need for tapering precisely on the ultra-toned recovery of the labor market. A nice puzzle.
